Shanghai China’s military spending is expected to reach almost $US160 billion ($183 billion) next year, more than the defence budgets of Britain, France and Germany combined, according to a new report.

The forecast is contained in an annual review of global defence budgets by consultant IHS Jane’s and is likely to unnerve China’s neighbours as ­Beijing becomes more assertive in territorial disputes across the East and South China seas.

China’s military build-up, together with fast-growing budgets in the Middle East, will push overall global defence spending up this year for the first time since 2009. Still, China’s spending in 2013, at $US139 billion, was less than a quarter of the United States’ defence budget. And Paul Burton, IHS Jane’s director for Aerospace, Defence and Security, says it has ­actually fallen as a percentage of GDP to 1.46 per cent from 1.63 per cent five years ago.

“The increase in the Chinese spending should largely been seen as creating a defence budget which is commensurate with a rising global economic and geopolitical power rather than as a sign of belligerence," he said in a written response to questions.

“There is, of course, the valid ­concern that the scale and pace of the increase in defence spending will ­create a level of instability due to mistrust among neighbouring nations and that to some extent appears to be spurring increase of spending elsewhere in the region."

Territorial disputes

China is locked in territorial disputes with Japan in the East China Sea and the Philippines, Vietnam, Malaysia, Brunei and Taiwan in the South China Sea. In recent years, the government has outlined its ambitions to become a maritime power.

Last August, President
Xi Jinping
inspected the country’s sole aircraft carrier, the Liaoning, a Soviet-era ship, which has begun training missions after being bought from the Ukraine 15 years ago and refitted in China.

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A Communist Party official reportedly said last month that a second aircraft carrier is being built in the northern city of Dalian. Its construction is expected to take six years and China is aiming to have at least four such carriers, according to Wang Min, the party chief of Liaoning province.

Mr Burton said wage pressures have also affected Beijing’s defence budget as the pay of around 2 million military ­personnel has gradually increased over the past five years. He expects the modernisation requirements of the People’s Liberation Army will mean “robust growth in defence spending is ­maintained". The numbers of personnel may decrease as resources are reallocated toward higher levels of technological capability.

“The process of turning the PLA into a truly modern fighting force remains a long-term project," he said.

China’s spending is up from $US111.6 billion in 2009. The government will release its official budget in March, which is likely to be smaller than the IHS Jane’s figures because it doesn’t include all research and ­development costs.